Wednesday, February 27, 2008

It is probably just as well that Adelaide is hosting a comedy festival at the moment, because the Marathon boys are making us laugh again.

In inverse proportion to the decline in value of ABC Learning shares, Marathon’s have surged 47 per cent since Monday, briefly touching $2 today, and currently at around $1.97.

Logic says this shouldn’t be happening.

The company had been given the appearance of a good old-fashioned dressing down by State Premier Mike “the miner” Rann, having its exploratory drilling operations at Arkaroola suspended indefinitely for behaving like “a cowboy” (Rann’s description) by dumping 22,800 plastic bags of radioactive soil and domestic waste in two shallow pits within the wildlife sanctuary.

But Rann was actually belting them over the head with a feather duster: they had already announced the suspension of their exploratory drilling, they still had their exploration license, and they were free to go ahead with the preparation of Environmental Impact Statements as a precursor to applying for a license to mine.

All the same, the market should have retained its scepticism about their ability to eventually mine in the sanctuary, and should have been somewhat cautious following Rann’s “punitive” measures.

On the contrary, Marathon Shares remained reasonably steady at around $1.20 - $1.30 for several weeks (market confidence) and then took off to the high $1.90s this week (market optimism).

Why? We would hate to suggest any insider trading, after all, that doesn’t happen on the ASX, does it?

But that’s what the kiddies in the chat rooms were suggesting. On Tuesday 26, bottle2 in the HotCopper forum observed “This stock leaks like a sieve before announcements. Always has done.”

And right on cue, the next day, Marathon released a media statement confirming that it “has been involved in negotiations with a third party considering a possible placement of approximately 13%” of Marathon’s issued capital, “and other commercial arrangements”.

LOL indeed!

(What they didn't say was that on Tuesday the Australian Stock Exchange had demanded to know whether the company was "aware of any information concerning it that has not been announced which, if known, coud be an explanation for recent trading in the securities of the Company", and had asked for an immediate announcement if that was the case.)

Then they put the clampers on, stating that “In view of the current market conditions including the issues surrounding Mt Gee (Arkaroola), the directors of MTN believe that any further disclosure of the particulars would be premature and potentially misleading.”

“Misleading”? Marathon? LOL+LOL+….

What are they doing….dropping the Mt Gee word as a feint to the left to conceal activity elsewhere?

Or does this signal the further expansion of Chinese investment, perhaps a major tunnelling firm with world’s-best-practice credentials to strengthen their application for a license to mine underground at Arkaroola?

Well, here’s a warning boys: Don’t Under Mine Our Environment!

PS

Those of us who have to fight bloody hard to get a wage rise of even a few percentage points out of our employers shoulld consider how hard it is being a company director.

You can’t be trusted to do the right thing by your shareholders, so you have to bribe yourself to do it!

In 2006, the directors and executives of Marathon were give options to obtain up to 2 million shares in the company as part of their remuneration package; in 2007 it was an extra 1.5 million each.

This is from last year’s Annual Report:

Options issued as part of remuneration for the yearended 30 June 2007

Options are issued to directors and executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to the majority of directors and executives of Marathon Resources Limited and its subsidiary to increase goal congruence between executives, directors and shareholders.

All options were granted for nil consideration.

Ah, that old problem of how to increase goal congruence! Luckyfor these boys that giving themsleves millions more shares is not based on performance criteria!

Sure is tough at the top when you can raid company finances using "goal congruence" as an excuse!

Tuesday, February 26, 2008

In the March 1996 Federal election, National Party candidate Larry Anthony made Australian history as the first member of a three-generational Federal parliamentary family.

Larry’s dad Doug had been a leader of the Nationals, and hence deputy Prime Minister in a federal coalition, and Doug’s dad Lawrence had also had a run as a federal pollie.

John Howard looked after young Larry with a minor portfolio, that of Children and Youth Affairs.When Larry lost his seat in the 2004 elections, Eddie and Le Neve Groves snapped him up for ABC Learning, the fledgling company they had listed on the Australian Stock Exchange in 2001.

A book could be written about the way politicians are recycled through corporate businesses once they are voted out of office or retire. Chris Schacht going onto the board of Marathon is a notorious local example.

ABC Learning had been enabled to list on the ASX when the federal government opened the way for private enterprise to operate child care centres in 1991. Legislation created by Anthony provided subsidies to families for child care that were passed directly to the centres they chose. Childcare fees went through the roof (currently between $60 and $100 per day, or a rise of over 70 per cent on 2002 figures). Thanks to Anthony, nearly 50 per cent of ABC Learning’s revenue is derived from these government subsidies[1]. No wonder ABC was keen to recruit Anthony. He had provided a government guarantee on their profitability and had the connections to continue to influence government policy in this area.

ABC Learning has continued to grow. Its growth has been aggressive and it has entered the US and UK markets. It is the world’s largest listed private provider of child care.

In the course of its growth, ABC Learning has proven to be a bit of a dodgy operator.

Staff are on AWAs (unAustralian Worklpace Agreements introduced by the former reactionary Howard Government) with low pay and conditions. There are reports that there are allocated amounts of toys per centre that are only renewed on an annual basis; of toilet paper allocations not being enough to meet need; of a reduction of sandwich provisions from three per child to one per child; and of poor health and safety provisions.

Indeed, Groves took the Victorian government to court when it tried to enforce inspections of ABC Learning child care centres. Groves tried to argue that the government did not have the authority to carry out inspections and that directors of the company were not legally liable for the children in the care of their centres. He argued that responsibility for children lay not with the company, but with its staff. The Victorian Supreme Court ruled that ABC Learning was indeed criminally liable for the children.

But the bigger they get, the harder they fall.

And that is what happened on February 26, 2008.

Over the course of 24 hours, 156,096,660 shares were traded, sustaining a massive 42.78 per cent loss in value.

(Note that there are two graphs here showing the decline in share prices which started in August of last year, and culminated in the further dramatic drop at the end of February this year; and the bottom graph which shows the volume of shares traded. The huge volume traded on February 26 is represented by the black vertical line at the end of the graph; shares traded since August 2007, by contrast, are almost too small to be noticed on this scale.)

Among those disposing of huge quantities of shares were the directors themselves.

It appears that a combination of factors were at work.

The company’s rapid expansion program was almost solely funded by loans, by debt, but the cash flow from the centres owned by ABC Learning has been insufficient to service the cost of the loans.

To add to the problem, most of the loans taken out by directors to finance the expansion look like having been margin loans, a high risk and poorly regulated form of loan which does not require disclosure to shareholders by the directors.

With a margin loan, the borrower has to not only repay the loan and interest, but has also to ensure that the market value of the underlying asset is maintained to an agreed level. If it drops, then the borrower gets a “margin call”, an order to effectively increase the value of the assets securing the loan.

Selling all or part of one’s share portfolio to raise cash may turn out to be one of the few options open to the borrower.

It appears that several of the directors in ABC Learning, whose shares last year were trading at $7 to $8 dollars, received margin calls prompting their sale of tens of millions of shares on February 26.

However, it is also likely that aggressive rumour mongering by international hedge funds may have played its part, causing an initial loss in ABC Learning’s share value, followed by share lending (in which said hedge funds pay a fee to superannuation companies to borrow their ABC Learning shares for a specified short period) and short selling (the hedge funds then sell the shares to force a drop in prices then buy them back at a profit when the price hits as low as its likely to go).

These are the scenarios being painted in the financial pages and in stock trading chat rooms.

The Australian (Feb 27, 2008, Short sellers teach ABC a hard lesson) reported that “A shell-shocked Eddy Groves has lashed out at hedge funds, claiming the mass market shorting of his childcare empire yesterday was ‘sad for Australia’….”

However, it went on to add that Groves “could not put to rest the rumours about the director’s level of margin calls”.

There were howls of outrage in the yuppiedom of chat rooms.

“The practice of superannuation funds Custodians lending shares that 9 times out of ten are to be shorted is not only deceptive it is DIABOLICAL. The shareholder is being CUCKOLDED,” wrote Michaelirish on the HotCopper forum.

Over on Aussie Stock Forums, Gekko raised the spectre of insider trading, very topically since the Australian had reported only days before that the illegal practice was “rife on the ASX”, saying: “I would love to know how these hedge funds knew the directors/founders were leveraged up on margin loans. From what been (sic) spoken, may os funds colluded to short sell and drag down …ABS knowing that founders would have margin calls is falls were large enough. But how did they know they were leveraged up?”

With the future of the company uncertain, it is time to ask why the federal government (National-Liberal Coalition) allowed and (Labor) continues to allow this McDonaldisation of childcare.

Children are not commodities and should not be placed into positions of vulnerability when their physical and emotional safety and early learning is allowed to be the plaything of a company that operates for profit.

When the British investment bank Northern Rock collapsed through exposure to the US sub-prime crisis, the British Government was eventually forced to step in and nationalise it.

If Rudd wants an education revolution, he should tell Eddie Groves that enough is enough, that children’s futures cannot be guaranteed through the volatility of the stock market, and certainly should not be subject to the predations of imperialist finance capital via the hedge funds, and bring all childcare provision back under direct government ownership and control.

[1] John Durie, The Australian, February 27, 2008: “ABC has grown quickly with the help of federal government subsidies to kindergartens that accounted for some $207 million of its $517 million in Australian revenues in the latest half.”

Normally police seize only the hard disks of any computer. In my case they seized the whole C.P.U., Monitor, Key Board, Mouse, Speakers everything. I have to buy everything as the seized items will be returned only after the closure of the case by the court.

Normally police seize only the SIM card. In my case police seized the mobile itself. That means I have to spend money for a computer and mobile.

The owners of the printing press which prints People's March were threatened by police. They refuse to print People's March. These are the problems before the People's March. Even though People's March is a Registered Newspaper registered under the Registrar of Newspapers for India.

Liberal financial assistance is the ned of the hour to resume People's March publication.

“Monopolies, oligarchy, the striving for domination and not for freedom, the exploitation of an increasing number of small or weak nations by a handful of the richest or most powerful nations – all these have given birth to those distinctive characteristics of imperialism, which compel us to define it as parasitic or decaying capitalism. More and more prominently there emerges, as one of the tendencies of imperialism, the creation of the ‘rentier state’, theusurer state, in which the bourgeoisie to an ever-increasing degree lives on the proceeds of capital exports and by ‘clipping coupons’. It would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a greater or lesser degree, now one and now another of these tendencies. On the whole, capitalism is growing far more rapidly than before; but this growth is not only becoming more and more uneven in general, its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (Britain)” — (Lenin, V. I., Imperialism: The Highest Stage of Capitalism)

I’m not holding my breath waiting for it, but just once I would love to see the headlines screaming from the financial pages of the capitalist press: “Lenin Vindicated!”

The fall-out from the US sub-prime crisis reveals more and more every day about the “parasitic and decaying” characteristics of imperialism outlined by Lenin in his 1916 book “Imperialism: The Highest Stage of Capitalism”.

Indeed, as author Robert Biel observes: “Today's capitalism, dominated as it is by currency speculation, the futures market, and so on, has become parasitic in ways that Lenin could scarcely have imagined, strongly confirming his argument that these are characteristics of mature capitalism, which it will never shake off. In this sense it is still correct to see imperialism as ‘the highest stage of capitalism.’ But despite this, it is important to recognize that imperialism can still undergo large-scale change as it acquires new regimes of accumulation that allow it to be parasitic in new ways.” (Robert Biel, The New Imperialism: Crisis and Contradictions in North/South Relations, Zed Books, 2000)

One of those new “regimes of accumulation” through which capital displays its parasitic essence is the hedge fund, an entity currently the subject of loud denunciation in the financial pages for its manipulation of the Australian stock market, the Australian Securities Exchange (or ASX).

We’ll come back to examine that claim later.

First, what is a hedge fund?

Hedge funds are companies that manage the finances of the super rich, seeking huge gains very quickly not by any activity that is related to the production of material goods or services, but by feeding parasitically off the finances tied up in stocks, bonds, and debt packages and so on.

They are a partner in crime to private equity funds. Where hedge funds strip mainly the stock exchange, private equity funds buyout companies and strip them of their assets for high rates of return, diminishing rather than expanding the bought out company’s productivity.

Like private equity funds, hedge funds are largely a phenomenon of the ascendancy of US imperialism following the Second World War. US monopoly capitalism made super profits out of both sides of that conflict, standing aside like a school yard bully while the little kids punched each other out and happily selling sticks and stones to all of them, then jumping in at the end following a foolish blow to the nose from an upstart who was supposed to be punching someone else, and then emerging from the fray with no further physical damage. All the other fighters were cut and bleeding, so the bully went on to state the terms and conditions under which he would patch them up and get them to make money for him. A couple of the kids wouldn’t cooperate, so he turned on them and called them names and declared that the century to follow was undeniably his!

The victory of the War Against Fascism weakened all the imperialist powers except the US. US monopoly capitalists had huge reserves of investment capital and directed them into reproduction of their own value in the form of surplus value from the production labour of workers of all countries in the capitalist world. The capital that came back to investors from new factories, mines, forests and farms (primary and secondary industries of all types) was a variable form of capital, but to make it, investors also had to lose part of their capital in the constant, unchanging form of manufacturing plant, buildings and so on. The biggest investors, long used to playing the stock market, sought more and more opportunities to avoid loss through investment in constant capital, and were insatiably attracted to parasitic and non-productive opportunities for a quick return.

Lenin had already described this, in 1916, as the “economic basis for imperialist ascendancy” in this passage from “Imperialism”: ‘“Great Britain,” says Schulze-Gaevernitz, “is gradually becoming transformed from an industrial into a creditor state.” Notwithstanding the absolute increase in industrial output and the export of manufactured goods, there is an increase in the relative importance of income from interest and dividends, issues of securities, commissions and speculation in the whole of the national economy. In my opinion it is precisely this that forms the economic basis of imperialist ascendancy. The creditor is more firmly attached to the debtor than the seller is to the buyer.’

Private equity and hedge funds are post-war manifestations of this phenomenon of imperialism.

Both operate independently of the stock exchange and are not subject to any real supervision or regulation. Speculation is raised to the level of an economic lever on the whole of the national, indeed international, economy.

So, what are the forms of activity of hedge funds, and why are they coming under fire from the officials of the ASX? Let’s return to an examination of the claims against hedge funds that have dominated the financial pages in recent weeks.

On 15/2/08, in “ASX probes hedge collusion”, we read: “The Australian Securities Exchange yesterday signalled that it would investigate allegations that hedge funds are colluding to push down the shares of major Australian companies. ASX head of supervision Eric Mayne yesterday said that he would be investigating market rumours that hedge funds were working together in packs to target specific companies.”

(“Working together” to manipulate the market for gain benefits from, and is a form of, insider trading which occurs when people with prior knowledge of information that relates to a company release that information to others who gain by it. Insider trading was described in another article in the Australian, on February 20, as “so rife in the Australian stock market it may be weakening the reputation of the local bourse…”)

The February 15 article was referring to the practice of short selling which means selling shares at, say $10 each, often with rumours about how much trouble the company that the shares represent is in, thus forcing other smaller investors who together might hold a sizeable aggregate number of shares to engage in panic selling, only for the hedge fund to then turn around and repurchase all or most of the now available cheaply priced shares (at say, $5 each) which bounce back up to their original value, or higher, at a tremendous windfall profit to the hedge fund. And all in the space of a few hours, or a few days or weeks at the most.

This volatility in the share market is largely created by the hedge funds who, like hogs at a trough, come charging in snorting and grunting to scare off the little sparrows that were picking at the edges, then settle down to enjoy the slops that they’ve just commandeered.

“Pooping and scooping”, as this practice is called, is illegal and hence the ASX investigation. The hurdle to the investigators, however, is that hedge funds operate from places such as the Cayman Islands and getting them to make any sort of a disclosure against their own interests is virtually impossible.

Thus, Leighton Holdings, Australia’s largest building contractor, a subsidiary of Germany’s giant Hochtief Corporation, appears to have been sold short on the 14th of February, with shares dropping 11 per cent from $54.33 to $45.60 despite an announced 33 per cent increase in profits. Why would investors flee a blue chip company making those sorts of profits? The Australian reported: “It is believed that hedge funds were involved, yet again. A broker, who asked not to be named, said: ‘I have no doubt that the fast-money guys bought stock on the back of a statement from Hochtief overnight.”

Hedge funds are also quite adept at the “pump and dump”, the mirror image of the “poop and scoop”. With a “pump and dump”, the rumourmongers artificially inflate the value of a company’s shares, and then sell them in vast quantities to make their profit. Stock market based chat rooms on the internet and spamming make these illegal practices incredibly easy for the hedge funds to operate.

On February 16, the Australian reported under the heading “Stock ‘loaning’ racket. Traders plunder super” that the ASX was reporting strong “evidence that hedge funds are ‘borrowing’ shares from superannuation funds to force down prices, a practice that is mauling retirement savings.”

Superannuation funds are some of the largest owners of shares in other companies, and use those shares to meet their liability towards paying super to retirees. Share lending is yet another completely parasitic activity. Shares are borrowed by the hedge fund for a fee paid to the owner, then short sold in a falling market and bought back again at a cheaper price afterwards. Providing the fall can be manipulated to provide a sufficiently profitable margin on the money made from the sale of the shares compared with the lesser amount required for their repurchase, the fees paid to the owner for the “loan” can be met and a sizeable profit made as well.

According to a report in the Weekend Australian on February 16-17, 2008, David Bryant, group executive of investments at Australian Unity, which has $6.4 billion in funds under management, likened the practice to "leaving a car in a car park, which lends it to local hooligans who return it damaged. The owner is left with the mess. "

Of course, with share lending, it is crucial for the hedge fund that a share it sells for $10 can be repurchased for a lesser amount, say $8. The profit is $2 less the fee, say 2 cents, that is, $1.80. Multiply that by many millions of shares and the cost of pina coladas in the Cayman Islands look cheap indeed.

Indeed, the quintessential parasitism of short selling is to neither own the shares yourself, nor borrow them from a third party to whom you pay fees, but to simply sell phantom shares, shares that do not even exist, force prices down in a “poop and scoop”, then use the money you’ve scared out of little investors to buy real shares at below value, and then “pump and dump” and make a squizzillion.

Such is the size of hedge fund operations that even companies as solid as the bank, namely the bank, can get shafted. By the end of last week all the focus was on the big four Australian banks, the Commonwealth, the ANZ, National Australia Bank and Westpac which were being short sold by hedge funds. “They’ve terrorised the Australian market,” said the adviser for a leading Securities firm. “Apart from the inflation rate, our economy is the best it’s ever been in the history of this country, and out stock market has suffered the biggest losses,” he said. The ANZ had just written off $US200 million to cover bad debts and its share price dropped by 6.1 per cent. For the ANZ, Australia’s third largest bank, that meant a decline of share prices of the order of 29 per cent since last October. The other banks suffered similar losses in share prices with the Commonwealth reporting a $100 million blowout in the cost of funding its loans and a 71 per cent jump in its corporate bad debt provisions.

Just as retirees are the ultimate losers in the speculative games played by hedge funds, so home owners are being made to pay for the losses caused by short selling of bank shares. This is the reason that the banks have been putting their rates up faster and higher than the official Reserve Bank interest rate rises: in proportion to what the hedge fund “hogs” slurp out of the bank trough, so the banks dig their avaricious fingers deeper into the pockets of home buyers to make up the loss.

The irony in all of this is that the business community, which has long paid for politicians to espouse the virtues of free market capitalism and to disparage regulation and control by governments, is now to be heard shouting precisely for regulation and control for its own protection from speculative and parasitic market forces.

Thus, Eric Mayne from the ASX said that the stock market was “keen for more regulation…of short-selling”. The Australian quoted unnamed fund managers who said that “share lending should be curbed and regulated”. The major shareholder in a boutique investment bank, Caliburn Partnership, called for “moves to strengthen regulation and deter market manipulation.” The chief executive of the ASX, Robert Elstone, called for the federal government to expedite changes to the Corporations Law to ensure greater disclosure of short-selling positions.

Dr Kevin Purse is a social democrat, a Research Fellow with the Hawke Research Institute at the University of South Australia and a former WorkCover Board member.

The virtue of the article is its exposure of the fallacy that the privatisation of WorkCover's claims management functions would be more efficient and save costs. Under piratisation, the pirates simply loot the people's treasure chest.

Kevin Purse WorkCover: how we can get it back to work

Recent calls for wide-ranging cuts to workers' entitlements to rein in WorkCover's unfunded liability are self-serving and detract from the real issues underpinning the state's beleaguered workers' compensation scheme.

One of these is the outsourcing by WorkCover of its claims management responsibilities to the private sector. Changes to legislation in 1994, driven largely by ideological considerations, paved the way for WorkCover to outsource its core business. (The full pattern of privatisation measures adopted by the state Liberal government in the 90s is revealed in the article Public Private Partnerships – ed.)

At that time, many politicians and business leaders argued that an injection of private sector expertise was the solution to the problems. Outsourcing, we were told, would reduce WorkCover's administration costs, provide greater choice for employers, improve service delivery and lift the scheme's performance.

From 1995, claims management was farmed out to nine insurance companies, then five, then four and, since 2006, one claims agent.

So, has outsourcing delivered on the promises made by its advocates? No. The much-vaunted benefits of outsourcing have simply failed to materialise.

In 1994, before outsourcing, the cost of administering the WorkCover scheme was $49.7 million. Outsourcing was supposed to save up to 15 per cent a year. This was never met. In fact, there were never enough savings, even though the number of WorkCover claims fell from 39,500 in 1995 to 22,020 in 2007.

Instead, there was a bow-out in administration costs. By 2007, employers, after adjusting for inflation, had paid an extra $75 million in administration costs – in effect, an "outsourcing loading" of more than 10 per cent a year.

The promise of employer choice was also an illusion. Before 2006, on average each year less than 1 per cent of employers changed claims agents, and since then, of course, any semblance of employer choice has disappeared altogether.

Service to injured workers has been another area of concern. This has been especially so for those whose injuries make an early return to work unlikely or more difficult.

Claims agents have all too often regarded employers as the "customer" and workers as "claims". Consequently, any commitment to help injured workers return to work has tended to fluctuate between indifference and aggressive claims management.

An incredibly high turnover of claims managers, estimated at more than 20 per cent, also hasn't helped.

Finally, though not surprisingly, there has been a conspicuous deterioration in WorkCover’s financial performance.

Before outsourcing in 1995, the average premium rate for employers was 2.84 per cent of payroll and the scheme had a funding ratio of 70.7 per cent. By 2007, the average premium had increased to 3 per cent and the funding ratio fallen to 64.7 per cent - even though workers' entitlements were greater than now.

The obvious solution is that WorkCover's claims management functions should be brought back in-house. This option now needs to be seriously explored, especially as the scheme's claims liability has increased by more than $300 million since 2006.

The outsourcing fiasco is by no means the only example of the scheme's poor management, and slashing entitlements to injured workers or raising premiums paid by employers is not the way forward.

Thursday, February 21, 2008

Marathon Directors Vic Bogacz and John Santich are certainly into playing the piano with all ten fingers.

In addition to continuing with their bid for a mining licence at Arkaroola, they have been busy cultivating their relationship with Primary Resources Ltd, another uranium-copper-gold explorer.

On 20 April 2007, the two companies entered into a joint venture for the further exploration of Primary Resources Warburton project.

This is a series of seven tenements on the WA side of the Western Australian-South Australian border which are prospective for uranium, copper, and gold, as well as having potential for nickel, platinum and diamonds.

The announcement (before the discovery of Marathon’s environmental vandalism in the Arkaroola Wilderness Sanctuary) was greeted with optimism in stock trading chat rooms, one post on HotCopper’s discussion board welcoming Marathon’s involvement because the Primary Resources management “wouldn’t know how to find the ground if it wasn’t for gravity”!

In the meantime, Bogacz and Santich had been beavering away in Poland.

They had established a company called Strzelecki Mining Ltd, a private company in which they were the major shareholders and directors.

Through Strzelecki they established the Silesian-Krakow Metal Mining Company Pty Ltd (SKKGM) as a private company with incorporation in Poland. Bogacz and Santich are its executive directors. On the SKKGM website they say that their presence will “ensure best practice”!! (And this while 22,500 bags of waste were being dumped in shallow pits at Arkaroola!)

Through SKKGM they took out a concession on the Myszkow-Zarki mineral system in southern Poland (where there are molybdenum deposits), did a bit of exploratory drilling on an already well-drilled site (sound familiar?) and claimed that the asset will prove to be “an excellent investment for the Company”.

So excellent that they have sold all the issued capital of Strzelecki, which owns 100% of the Polish project, to Primary Resources Ltd.

A lot of the words on the Primary Resources and SKKGM webistes seem to have been plagiarized from the MTN prospectus. These blokes have made an art form out of speculative ventures that do not come to fruition. About new techniques on old ground. They are reworking old ground, but they are grazing new pastures.

The Primary Resources stock exchange “announcements” are also strikingly similar to some on MTN, right down to the graphics. Bogacz and Santich are behaving like first class shysters, who have learned how to get other real money sources on board, before departing themselves after some lucrative share manipulation. Consider – these two had 2 million Marathon shares issued as “options” at 20 cents. In July 07 those shares traded at $6 plus. Both have sold parcels of these shares. Even now, when the shares are around $1:40, a twenty cent option (about 18,600 traded last week 15 Feb) provides good pin money and a first class airfare to bring Polish money on board. Net profit of $22,320 to be exact on what is a very small parcel – don’t scare the hens.

The real problem is that two serious investors got taken in – China’s CITIC and Queensland’s Talbot. Now they are intent on trying to get some of their money back. It cost them $6 a share to buy in, and they went in in a big way. Love to hear what they really think.

At the time of the Polish announcement, it was stated that “Two of the major shareholders and Directors of Strzelecki, Dr John Santich and Dr Vic Bogacz – who have extensive experience in Poland’s resources sector and who are Executive Directors of Mt Gee uranium project owner, Marathon Resources – will join the Primary Resources Board.” (Dec 19, 2007).

Well according to the Primary Resources website, at least of today, February 22, 2008, there’s no sign of them on the Board.

Maybe Primary has told them to lie low and wait till the Arkaroola dust has settled.

In 2002 the Department of Treasury and Finance of the Government of South Australia released Partnerships SA. This document was a set of administrative instructions applicable to all government agencies in SA in relation to the development of infrastructure and the provision of services. In short, Partnerships SA encouraged private sector investment in public infrastructure where “such investment brings clear benefits to the community.”

In 2005, the Strategic Infrastructure Plan for SA was released, providing additional guidelines and encouragement for “new infrastructure investment by government and the private sector over a ten year planning horizon and improve the management and use of the state’s existing infrastructure assets.”

In the 2006-7 Budget, the government announced a series of projects to be known as Public Private Partnerships (PPP). These were the Education Works program for the building of six new “super schools”, the construction of new men’s and women’s prisons at Mobilong, and a new “secure care” facility for youth and a new pre-release centre at Cavan.

“No more privatization was the catch cry of the ALP (Alternative LiberalParty) at the past State election. Now we are faced with more privatelyrun prisons, our future water supply from a privately owned desal plant, a newhospital and hospitality services privately owned…When will they everlearn?"

Bruce of Warradale, AdelaideNow website 17/12/07

The completion of a PPP for new police and courts facilities in six regional locations occurred during 2006-7, and the 2007-8 Budget foreshadowed the building of the newly-announcedMajorie Jackson-Nelson Hospital as a PPP in a “timely and cost effective way”.

Towards the end of 2007, Treasurer Foley indicated that a new water desalination plantmight also be built as a PPP.

Our view is that the Labor state government, despite its own protestations to the contrary,is pursuing an agenda of privatization, and that insufficient public scrutiny has been directed at their preferred PPP model for infrastructure development and operation.

2. Putting Profits before People (PPP)

The opportunity for capitalist companies to invest in, and operate, government infrastructure (roads, bridges, prisons, schools, hospitals etc) is part of a ten to fifteen year old international phenomenon.

Whether they are dubbed PPPs, Private Finance Initiatives (eg in Britain) or 3Ps (Canada, Philippines and others) all share similar features and meet the shared needs of governments and capitalists respectively.

Dealing with governments first, it must be said that we all make a slip of the tongue at times when we talk of this or that party “getting into power” when they win an election. It would be far more accurate to say that a party “wins office” because the reality is that power resides in the ruling class of the very biggest industries and manufacturers, the very biggest banks and finance houses, the monopoly owners of the media, and those entrusted with running the army, the courts and the police. Of course, this view is not shared by everyone, but it is the view that we take as communists when we observe the myriad invisible boundaries within which even the most “radical” and “reformist” of governments operate when they “come to office”. These governments have the “power” to make decisions, but whether by choice or by the simple realities of where real power is located, governments act as executive committees for the ruling class. They do their best for the ruling class –sometimes even settling its internal disputes and contradictions – regardless of where their electoral support is located.

The power that resides in the ruling class, including the power to shape the social agenda so that its ideas become the dominant ideas in society, is so all-pervasive that all parties contesting parliamentary office invariably feel pressure to please, or at the very least to minimize the offence that they give to, the ruling class.

To maximize their chances of remaining in office, bourgeois politicians strive for an “investment friendly” environment, for “partnerships” between government and business. And because there is a regular competition for office between parliamentary parties, there is also competition for the endorsement of the business community through the monopoly capitalist media.

Hence, the interests of governments, both state and Federal, and of whatever political complexion, are tied to the need to provide the most profitable opportunities, and most inexpensive services, to the monopolies. In this sense, the provision of PPP opportunities to private sector investors has become unavoidable for parties in office.

In relation to the private sector, it is a given of capitalist economics that the profit motive is at the heart of all economic activity. Not even the most reactionary apologist for capitalism would try to deny the primacy of the profit motive for the private sector. Private capital must seek to constantly recreate and increase its own value, but it operates in a world of finite opportunities for doing so.

Hence there is the compulsion to export capital from the most heavily industrialised (imperialist) nations to those areas abroad where labour costs are lower and raw materials cheaper. Whole industries are exported in the search for lower costs and higher profits. But even this has limits to it, and compliant governments in the major capitalist countries have looked in recent times to creating opportunities for investment in their own infrastructure projects in order to open up newer sources of profit for the big monopoly companies.

Thus, there is a community of interests between governments and capitalists that has led to the PPP phenomenon. And the question to be answered now is whether this is in the interests of the community.

In a rare moment of honesty, the Australian editorial commented on PPPs that“As the private sector generally expects a higher rate of return on funds thanthe rate at which governments can borrow, the savings must come from eithergreater efficiencies in construction and management or a more direct cost tothose who use the infrastructure.”(Australian, Jan 23, 2008)

3.PPPs and Privatisation

Prior to the election of the Rann Government, the previous Liberal state government engaged in an orgy of privatisation. State utilities were sold off to the highest bidder despite the fact that they had been contributing to state revenue, had provided cheaper and more efficient service than what has come since, and had provided opportunities for apprenticeships and skills training. Liberal state Treasurer Rob Lucas quickly became on the nose with the community over his promotion of a privatisation agenda. Assets privatised, or opened to competition from private providers included

- the SA Gas Company (sold to Boral in 1992),

- State Transport Authority (dissolved in 1994),

- SA Water (operation, management and maintenance contracted to British company Thames Water Overseas and French company CGE Australia, for fifteen years in 1995; United Water, the company through which the contract is carried out, is now 9%5 owned by France’s Veolia Water Australia)

- Electricity Trust of SA (Torrens Island power station leased to a Japanese company by the Bannon Labor government, ETSA broken into two and later seven entities and forced to compete on the National Electricity Market, ETSA transmission system leased to the US Edison Capital company for 25 years in 1997, the contract for the Pelican Point power station awarded to National Power, a British company, in 1999),

- Outsourcing of the claims management responsibilities of the state’s workers’ compensation scheme, WorkCover leading in massive blowouts to administration costs, poorer service delivery and a general decline in the scheme’s performance to the point where the government is considering slashing entitlements of injured workers to rein in unfunded liabilities

- Six State Government Insurance Corporation hospitals sold to private investor company Healthscope (1994), which also won the contract (1995) for a co-located private hospital on the site of the publicly owned Modbury Hospital site. The private hospital was never built, but the contract to operate Modbury Hospital went to Healthscope.

IT’S PRIVATISATION! The government cannot hide behind fancy words suchas private-public partnership. If it walks like a duck and quacks like aduck, then it’s a duck

Brian of Wynn Vale, AdelaideNow website20/12/2007

Given the general unpopularity of privatisation, the SA Labor government is at pains to denyany link between PPPs and privatisation. The Introduction to Partnerships SA reads: “TheGovernment is strongly opposed to privatisation. Partnering arrangements are not privatisation…the Government retains a key strategic interest in the infrastructure and strong policy control over the services delivered…”

Our view is that this explanation lacks credibility. Privatisation can be as simple as the sale of a state asset to the private sector, or it can be hidden behind “competition policy” that requires former state monopolies to engage in competitive tendering on the open market, or it can be disguised as a so-called “partnership” in which governments award lucrative infrastructure contracts to the private sector for the construction and operation of public services over a set period of time. In the latter, the PPP model, even the claim that governments retain “strong policy control over the services” is open to debate: “Once the private sector controls the operational management of facilities, it is in a powerful position to influence service delivery policies” (John Spoehr, PPPs in South Australia: Partnerships, privatisation and the public interest, 2002).

4. Value for Money?

According to Partnerships SA, a “public private partnership is first and foremost a method of procurement that seeks to achieve value for money for the Government” (p. 6). And again, “The project must be able to demonstrate that, on a whole of life basis, the cost to the community of the project provided by the private sector is lower than for the equivalent project provided by the public sector” (p. 7).

The method commonly used in PPP projects to establish “value for money” is the Public Sector Comparator (PSC), an “assessment of the project’s cost effectiveness if wholly delivered by the public sector, against which private sector proposals can be compared” (Partnerships SA p. 7-8).

Experience overseas has shown the PSC to be very much a smoke and mirrors exercise, partly hidden from public or independent parliamentary scrutiny because of “commercial confidentiality” and partly a pea and thimbles trick revolving around “discounting” and “risk transfer”.

No-one seriously pretends that private borrowers can get investment finance on more favourable terms than governments. Governments (particularly when they can rest on the laurels of a AAA credit rating from Standard and Poors) can borrow much more cheaply than the private sector.

“What makes the difference is the cost of capital…even the leastcredit-worthy government could borrow money more cheaply than Australia’s most credit-worthy corporate borrower.”

Kenneth Davidson, economicswriter for the Melbourne Age, 4/12/03)

One of the attractions of a PPP arrangement to a government is that it can hide the up-frontcapital costs (public debt) incurred through its own financing of a project as a recurrentexpenditure item made as a series of payments over the life of the PPP. According to JohnSpoehr, “in order to create the illusion that public sector debt levels are declining…governmentpayments on PPPs are regarded as expenses rather than debt. As such, the payments that governments make over a twenty to thirty year period towards PPP projects are kept ‘off balance’ sheet, ensuring no addition to officially measured debt” (PPPs in South Australia p. 2) This is a politically attractive option for governments keen to be seen to be framing “surplus” budgets by hiding capital debt in recurrent expenditure budget lines.

The attractiveness of this budgetary smoke and mirrors doesn’t get around the fact that governments can borrow more cheaply than the private sector, and that government financing of projects is therefore better value for money for the taxpayer. Now they reach for the pea and thimbles.

“Of course it is going to cost tax payers more if private investment buildsthe hospital. Why else would INVESTORS pay to build the hospital??All it does is change the period the cost is borne.”

Heath of Morialta, AdelaideNow website,18/12/07

The first thimble under which the pea of the real value of the project is hidden is the discounted cashflow analysis based on comparisons of interest earned on loans that are paid off quickly(government financing) or over a 20-30 year period (PPP financing). Clearly this skews the value of the project in favour of the private sector with its protracted repayment method, particularly if the discount rate is higher, rather than lower. In practice, the discount rate is usually chosen arbitrarily, and as one study of PPP hospitals in England showed, a variation downwards of only 0.5% in the 6% discount rate used in the projects turned a value advantage to the private sector into a value advantage for the public sector (The British Medical Journal: PFI in the NHS – is there an economic case?) It’s a simple rule of thumb with accountancy: the answer can be determined by the basis on which the questions are framed.

The other thimble under which our pea can be hidden is risk transfer. When governments borrow money to finance infrastructure, they accept all the commercial and developmental risks (eg not meeting deadlines, price rises); however, if private financiers fund the project, they are meant to take on the risks. So a nominal figure, but often in the tens of millions of dollars, is added to the PSC to represent the cost of the risk that the government would have had to expend if it was financing the project itself.

There are two problems with this: one, the value of the risk transfer is quite arbitrary and can easily be inflated to make the public financing of the project appear to be poor value for money; and two, in practice the corporate world can easily evade the cost of risk and has successfully passed it back to government time and time again. This makes the exercise of adding a risk transfer component to the PSC somewhat dishonest.

“Only the government and the developers benefit from a PPP arrangement.Past experience shows clearly that it means permanently higher costs to usersand, perhaps most importantly, all embarrassing information will be hidden fromthe taxpayers under the cloak of ‘commercial confidentiality’”.

Ken of Blackwood, AdelaideNow website17/12/07

The tax-paying public must have the right to know the truth about PPPs and value for money. The Public Sector Comparators for each PPP must be tabled in parliament and must be subjectto independent assessment. “Commercial confidentiality” is an inappropriate defence againsttransparency of government interactions with the private sector in relation to the construction, maintenance and operation of public infrastructure.

5. Problems, problems, problems (PPPs)

PPPs, PFIs and P3s have all run into problems interstate and overseas.

A few examples are offered here. Many more can be found on the websites listed at the end.

- The Sydney airport rail link ended up costing taxpayers $704 million when the Carr Labor government stepped in and bailed the project out.

- St Vincent’s Hospital (Gold Coast) taken over by the Beattie Labor government in 2002 with losses of $10 million.

- The Melbourne CityLink tolls “are twice as high as they would have been if the tollway had been financed by government borrowing” (Kenneth Davidson, Age, 25/9/07)

- “The most authoritative study of Victorian PPPs, undertaken by lawyer and management consultant Peter Fitzgerald, looked at eight PPPs and concluded that they cost the Victorian taxpayer $350 million more than traditional debt financing would have cost” (Melbourne Age, 4/12/07)

- 1500 people demonstrated on Dec 9, 2007 in Brampton Ontario to protest the shortage of staff and beds and long wait times in emergency care at the newly opened Brampton Civic Hospital, the first P3 hospital in Ontario. “…major cost escalations across all Ontario’s new P3 hospital deals have rendered unbelievable the claim that P3s come in ‘on time and in budget’” (Natalie Mehra, Director, Ontario Health Coalition Dec 10, 2007)

- The Audit Commission for England and Wales found in 2003 that the quality of PFI schools was not as good as schools built by more traditional means; the costs of cleaning and caretaking appeared to be higher in PFI schools; PFI schools were not built more quickly.Audit Scotland in 2002 found that in five of six cases of new schools, the PFI construction costs were higher than for the Public Sector Comparator (PSC), and that in all six cases, the operating costs of the PFI option were higher than the PSC.

- UNISON Scotland’s (public sector union) analysis of official figures from 35 schemes found that estimated public sector comparators (PSCs) were 6.4% (median) cheaper than the contractors’ bids. For just these 35 schemes, that means almost ₤720m is being wasted - nearly enough to pay the whole of the PFI bill for Wishaw General Hospital.

6. Crony Capitalism

It is hard not to see PPP arrangements as a type of crony capitalism in which a privileged few big corporations are set up to benefit from rock solid investment opportunities with governments as guarantors. In return, these large corporations help the government to establish its “business-friendly” and “investment-friendly” credentials. This is the gist of John Spoehr’s observation that “PPPs allow select private firms privileged access to market and political intelligence. They represent the hollowing out of government, drawing no distinction between public and private interests” (PPPs in South Australia p. 5).

Indeed, studies here and overseas confirm that the real cost of PPPs is normally higher than the cost to the government of funding infrastructure through its own borrowing. But because the government can cosy up to big business and rearrange its budget to give the appearance of running a surplus, it is happy to have the taxpayer paying more in the long run.

Federal and state Labor governments have long ago dropped any pretence that they will confront the ruling class on behalf of the people who have traditionally elected them. The Rann government now invites the corporate world to join SA Progressive Business in these terms:

The Rann Labor Government, now in its second term and with a strong majority, is seeking to build on its achievements and develop closer relationships with the business community.

South Australian Progressive Business provides a unique opportunity for business to meet with Labor leaders who are pro-business, pro-mining, and pro-growth.

Members will be able to join Mike Rann and his team at regular functions to discuss developments in policy.

Members are also invited to regular briefings by Senior members of Labor’s State and Federal teams to have the chance to meet and discuss your views with other business and industry leaders who share a non-partisan commitment to maximising South Australia’s economic potential.

Foundation Membership ($10,000) entitles the member to:

- Events including Breakfast Ministerial Briefings and Twilight Ministerial briefings for up to three company representatives.

- Advance notice of functions and tickets reserved for major functions for two weeks.

- Pre-event drinks with function special guest.

- Corporate recognition at functions.

Such is the party called Labor!

7. The Menace of Private Equity Buyouts

A further problem associated with PPPs is that the private sector fund tied up in the construction, maintenance and operation of public facilities is not protected from acquisition by other private financiers. Public equity in such facilities is not for sale in the market place (unless the government opts for privatisation). But every table in the market place of high finance is simultaneously occupied by bodies of organised finance that can be buyers one moment, and bought the next.

In the ordinary course of events, it is not unusual for one company to encourage sale of part of its assets to other companies in the hope of raising additional capital for various projects. Thus, Hochtief, a major player in PPP schools in Europe and parent company of Australian construction giants Leighton, Thiess and John Holland, announced in January 2007 a restructure to facilitate the opening up of its PPP school projects to other investors.

In this case, Hochtief did so on its own terms, and perhaps not much will change in the way that it operates its schools.

But what if the purchase of assets in a PPP investor company is “hostile”?

Nowhere is the vulnerability of private capital more dramatically displayed than in the world of private equity buyouts. Such buyouts are usually done for short term gain by owners of private capital who are happy to asset strip and sell on again at a huge profit. The assets, of course, include employees and their working conditions.

Private equity buyouts are usually leveraged, or financed largely by debt. In fact, often the company which is bought out is then forced to take out a loan to cover the cost of its own takeover!

Prisons, hospitals, schools and other government infrastructure can be impacted severely by the buyout of the majors (the PPP developers) or their contractors (eg cleaning, personnel or record-keeping companies).

Private equity has become a major growth area in the Australian economy following the Howard Government’s changes to banking regulations which gave major concessions to those undertaking leveraged buyouts (LBOs). According to the Reserve Bank (Financial Stability Review – March 2007), over the year 2006, and following the changes made by Howard, “LBOs accounted for around a quarter (by value) of all mergers and acquisitions of Australian companies, compared with less than 5 per cent in previous years.”

8. Getting further trapped in the clutches of imperialism

The largest concentrations and most aggressively expanding sections of finance capital in Australia are those that are sourced from overseas (imperialist) investors. The largest construction companies are subsidiaries of overseas monopolies. For example, Leighton Holdings, Thiess Pty Ltd and the John Holland Group are all subsidiaries of the German Hochtief Group, which has emerged as a major PPP contractor and operator in Britain and Europe. Privatisation via the PPP model leads to deeper and stronger integration into the web of international finance capital, with Australia losing control of its few remaining public assets to international finance capital and gaining only exposure to international economic crisis.

9. So what are we proposing?

It should be obvious from the above that we are not great fans of the PPP model. It is also clear that as a minor voice in the community we cannot realistically expect to turn back the decisions on already-announced PPP projects in South Australia.

However, we believe that PPP strategy favoured by Rann and Foley is bad for the people of South Australia, and that there needs to be a coalition of individuals, organisations, unions and parties that can together scrutinise what has been proposed so far, try to oppose future PPPs, and encourage governments to exercise responsibility, on behalf of the community, for public infrastructure projects.

Specifically, we call for:

· The release to the public of Public Sector Comparators for all current PPP projects in SA

· An independent assessment of the PSCs to determine the real cost to the public of the various projects

· Legal protections to be written into the PPP contracts to ensure that no cost blowouts (risk) can be transferred back to the government

· No new PPP contracts to be approved, including for the proposed desalination plant, the rumoured replacement of Yatala Prison, and the South Road tollway

· A new PPP - a Public Procurements Policy – that will ensure that government accepts responsibility for publicly financing, maintaining and operating public infrastructure in the needs of the whole community.

You can assist by writing to the media or getting onto talkback radio, and by raising these issues and passing resolutions in support of them at your union or community organisation’s meetings.

And, from John Speohr’s book, 2003, Power Politics: The Electricity Crisis and You:

Not so John Spoehr. More informed analysts know that it would be far more advantageous for all those who invest in private panels for their houses, to put the same money into a cooperative or public project located in a high sun area connected to the grid, like Coober Pedy. Collectively, we would all be better off. Higher energy returns, lower collective costs, huge efficiencies in installation.

So who won, and who wins, when the government’s Minister for Sustainable Energy makes it a private promotion?

Too many coincidences!

So what do these men have in common? More coincidences?(and why is he smiling?)

Number 1 Mike the Miner aka Mike Rann, Premier of South Australila

Number 2 Dr John Santich

Not forgetting number 3 The Hon Paul Holloway, State Minister for Mineral Resources Development, who officially opened the new offices of Marathon Resources at Port Road, Adelaide on 20 July 2007.

Who is the missing shareholder? From the Marathon ResourcesTop 20 Shareholders, December 2007:

Sheoak Runner Pty Ltd 418,000Undisclosed Shareholder 415,500

From the Top 20, September 2007:Mrs Georgia Georgaklis 415,500

Whose car?

Whose Place?

What Meeting?

When?

Whose words about which mine in the heart of a wilderness sanctuary?

“and we have essentially the approval of the state government– it’s supported it in every possible way.”

(Answer: Dr John Santich)

This government has used harsh language lately, but it’s been careful to avoid the obvious – Ban mining in Arkaroola Wilderness Sanctuary! Now we can begin to understand why. Can it be they seek to distance themselves from their mining mates in an effort to avoid revealing close connections with the principals of an enterprise they’ve chummed up to in the past, and probably will again with disastrous consequences for a previously pristine wilderness?.

This?

Or this?

Or this?

The Professor of commercial geology at Adelaide University, Professor Plimer had this to say:

“There are more than enough uranium mines in SA to mine ahead of the Marathon (Mt Gee) deposit.” Page 15, The Independent Weekly, Saturday 15 February.

Act now – write to have mining banned in Arkaroola Wilderness Sanctuary.

Where are the silent Ministers, the Minister for Tourism, and the Minister for the Environment?

Imagine two enthusiastic Wilderness Defenders canvassing for memberships outside the Blackwood Pharmacy about 11:30 am on a fine Thursday morning, 21 February 2008.

Conversation:

Sympathetic, but informed, passer by: Q: “What about Arkaroola?”

Committed Defender: A: “Oh, we’ve won that, Marathon’s moving out.”

Response: (invective deleted) "Not true, check your facts. Go to this blog site and see for yourself."

Why? According to a well hidden Advertiser report (page 68, 20 Feb 2008)

“Three of Marathon’s four rigs have left the site. The final rig may be used to drill for water.”

How very, very Orwellian. This means one rig remains, and in drilling for water it will of course report on the geology it encounters. It is not only natural, it’s a requirement of the Mines Act which, for once, Marathon will happily fulfil. Water is itself a very scarce and precious commodity in this region. Attempts to mine it to process uranium will do enormous damage. For a more detailed report on this latest threat, see the new post at http://unknownsa.blogspot.com/

Marathon says in its own recent releases that it will ramp up feasibility studies to progress mining well ahead of the original estimation of 2011. They want to complete the study by July 2008. The only thing that has changed is the length of the tunnel being talked about. It’s grown, like Pinocchio’s nose, from an unrealistic, and underestimated, 2km, to a very fanciful 10km. They are looking for a partner with the pre-requisite engineering staff (and money, since they could not raise the $27m they were after in the first place) to progress the issue. Check out who’s who in partnership with Marathon – look up UraniumSA; Stellar Resources and GingerTom. Maybe Tom Phillips can bring the same closure to this project that he did to Mitsubishi, which has just closed its manufacturing plant in Adelaide. Seriously, he’s probably not there to for that. But, just like Schacht, he carries influence, with the government, and that’s why he is there with UraniumSA.

And, again, to quote the good old Adelaide Advertiser, page 73 this time, 16 November 2007:

“MARATHON Resources is within weeks of signing a deal with a major mining contractor, which could cut years off the development of its Mt Gee uranium deposit. Denis Wood, who was recently appointed to oversee the Mt Gee project in the northern Flinders Ranges, said yesterday he wanted to push the project faster to ensure it came online before some other projects which were in development, especially large overseas projects.

“Mr Wood, speaking at the company's AGM in Adelaide, said he wanted the development timetable, which aims for first production in mid-2011, speeded up. "I would like to see some acceleration of the process," he said. "We are a bit short on some drilling results." Mr Wood said despite this, the company started detailed mine planning this week and would have a mine plan ready by the middle of next year. (2008) The company also aimed to have a pre-feasibility study finished by that time, he said. Mr Wood said the shortage of skilled mining engineers and similar professionals had led to a decision to partner with a mining contractor to speed up the development of Mt Gee. "For a young company like Marathon to go out and pick up a suite of engineers would be no small task," he said. On the other hand, a partnership with a large contractor would "take years off our timetable" he said. Marathon chairman Peter Williams said the company had started a drilling campaign in October, in a bid to increase the current 42.8 million tonne uranium oxide resource at Mt Gee.”

This is the same Mr Wood who helped Talbot Holdings bring its Coppabella Coal mine into production, a project which has since been put at the centre of corruption inquiries in Queensland, with its principal shareholder involved in court action over corrupt dealings with government Ministers.

But Marathon’s wordsmithing’s fooled a good many environmental activists into claiming victory when there isn’t one. Arkaroola Wilderness Sanctuary is even more vulnerable because those who would otherwise act to support and protect it will relax and let their guard down. This couldn’t be made any clearer than it has been on the http://unknownsa.blogspot.com/. Readers are encouraged to visit it for the detail.

The real questions that need to be asked remain the same – Why has this cowboy company got such an easy ride, and why hasn’t the SA government kicked it out of Arkaroola Wilderness Sanctuary?

They have admitted to a continuing history of environmental vandalism, with a confirmed track record over the years. In 2005 they buried more radioactive material, this time in barrels 8kms from the present travesty. For some reason, the SA government saw fit to ignore this in its recent announcement as it continues to overlook its responsibilities in the administration of not only the Mining Act, but of Heritage and Environmental legislation. Demand Marathon’s removal – write or email the politicians listed at the end of this post.

The stock market is getting jittery. The comments and the graph below represent something of the credibility gap, (price vs volume) and these comments from stock trading insiders,

Latest comment(s) from: http://www.aussiestockforums.com/

Re: MTN - Marathon Resources

Quote:Originally Posted by jman2007 Well if you're so sure that the indicators are right and it's going to take off again, then why can't you make your own decision about whether it's undervalued or not?It doesn't matter if it was 1 person repsonsible or 25 people responsible for dumping waste. At the end of the day, it is still work being carried under MTN's banner and senior management have to carry the can. Responsibilty comes with seniority, and that's why they get paid the big bucks. Try telling the DPI that it was "one person's act of irresponsibity therefore we didn't know about it, so you shouldn't fine us" and they'd collapse laughing.You might want to do some background research on MTN yourself, the Geo's I have dealings with in SA claim that MTN originally tried to claim work from previous companies as their own, made ridiculous assumptions in correlating profiles in section that were hundreds of meters apart, and reported EOH mineralisation when in actual fact, the hole continued and ended in barren rock. Oh and by the way, I don't get my info from the meida, but from formulating my own opinions and talking to people who actually know what they're on about.jman

Reply from Reece55: Jman I consult to a leading exploration entity in SA in my capacity as an accountant and the same views re the dodgy assumptions in their supposed JORC were relayed to me too...... The summary I received from the expert Geo's was there was an awful lot creative interpretation to build the resource, because the number of drill results were insufficient to perform the calculation.... They likened it to joining the dots when they were in actual fact very far apart....Sounds like there are a few sad investors on this board......... Perhaps they are looking at MTN's chart upside down?

This is what they were looking at: Price is top line, volume of shares, bottom line.

21 February, 2008. Doesn’t make sense either way, any way.Upside down they may be, but not out.

They are very clever wordsmiths.

Write to the SA and federal government ministers responsible demanding an end to this charade.

Sunday, February 17, 2008

Attacks on workers compensation entitlements are part and parcel of the profit-driven system of capitalism.

There is no right for working people under capitalism that has not been fought for during long and arduous campaigns.

No sooner is an advance made on behalf of the working class than the capitalists begin the process of undermining, stripping back and weakening what workers have won, with the aim of ultimately dismantling it altogether.

In South Australia, the focus of this process is on workers compensation.

Workers compensation here is administered by the WorkCover Board, essentially a private company that has a charter to administer an Act of the South Australian Parliament. It is required to have a Board that nominally includes a range of “stakeholder interests”, from industry and business representatives to the Secretary of SA Unions.

For some time now, the business lobby has been campaigning to have its compulsory WorkCover levy reduced. This means that they are not prepared to pay for the workers they have injured.

But it is complicated by the existence of a parasitic industry that grows up around injured workers: this includes some on the WorkCover Board who have their own rehabilitation companies, and a small number of doctors and specialists who rort the system by handballing injured workers around a network of profiteers in whose financial interest it is that workers do not quickly return to the workplace. And it includes the financial advisors and the larger of the Board shareholders who want to see big returns on the funds generated by the employer levy. There is said to be a $1.5 billion overseas investment portfolio held by WorkCover yet little or no public disclosure of this portfolio’s exposure to the house of cards that is the current imperialist financial crisis.

Whilst these people of dubious merit are never examined by the capitalist press, there is a continual stream of public attacks on injured workers. TV “current affairs” programs lead the way with “Man with back injury builds beach resort penthouse”-type stories.

The reality is that whilst a tiny handful of “injured” workers do rort the system, the vast majority of injured workers want to be back at work, and find the whole process of referrals and evaluations worse than the original injury. Many find it hard to protect their self-esteem and sense of personal worth and develop psychological injuries on top of whatever injury took them from the workplace in the first place.

One might be forgiven for thinking that a state Labor government might be more protective of the interests of the workers. Labor has traditional ties to the trade union movement and has historically relied upon the working class for its electoral strength.

Experience here and overseas tells us that social democratic parties are parties of capitalism. They confine their activities to the political institution of capitalism – parliament – and restrict their goals to at best, minor reforms to the economic system of capitalism.

The state Labor government unblushingly badges itself as “pro-business, pro-mining, pro-growth” and provides capitalists with access to its Ministers that working people can only dream of.

To cultivate its ties with the business community, the real ruling class, the state Treasurer has carefully secured a Triple A credit rating with Standard and Poors, and has been bluffed by Business SA into seeing WorkCover’s $850 million unfunded liability as a threat to that rating.

The unfunded liability, however, is largely a paper entity. Not every worker is going to be hit by an evil magic wand tomorrow, and thus claim their entitlements as injured workers.

Nevertheless, it appears certain that the government will cave in to the demands of the ruling class and cut compulsory levies and workers entitlements.

(Adelaide's only daily newspaper, the Murdoch rag The Advertiser editorialised with some candour, as follows: "There are only two ways to rein in the WorkCover debt - increase premiums to employers - which would have a negative impact on profits and ultimately employment opportunities - or reduce worker benefits." Unfortunately, they chose not to spell out what the 'negative effects' of the latter, clearly their preferred choice, would be.)

That die was cast when the government capitulated to Business SA demands for cuts to payroll tax: more than $500 million in cuts to payroll taxes has been delivered in the last two state budgets.

SA Unions Secretary Janet Giles (holding banner, right) has resigned, as of today, from the Board of WorkCover to free herself up for a union campaign in defence of injured workers.

This campaign must draw on what was positive in the Your Rights at Work Campaign that helped topple John Howard’s anti-worker federal Liberal government, whilst recognising that we are some years away from a state election, and that a sharper and more active and aggressive campaign is needed to defeat the changes to WorkCover,

There must be plans for mass rallies and stop work action.

The demand must include the abolition of the WorkCover Board and its replacement with a public authority accountable to state parliament.

The campaign should also demand the creation of an Independent Commission Against Corruption, and the ICAC should hold an enquiry into the activities of the current Board at the earliest opportunity.

While we can not expect an ICAC to be truly “independent” (that would require independence from the whole ideology of capitalism), the fact that it would not be obliged to act in the interests of the government of the day would make it a welcome extension of bourgeois democratic rights.

Tuesday, February 12, 2008

Marathon dumped more than 10,000 bags of radioactive ore during its violation of the Arkaroola Wilderness Sanctuary. At 5kgs/bag, that’s more than 50 tonnes of radioactive waste. Where is it? Marathon has admitted a publicly proven record of inadequate management. There must be a full, open and public inquiry into the whereabouts and management of this lethal material.

On 9 May 2007 Marathon itself said.

“To date analytical results have been received for slightly over 5000 samples with (sic) results of another 4000 samples remain outstanding from the drilling program. Ongoing laboratory analyses will be released as soon as practical.” Nothing about what they did with the material.Source: 090507_3rdDrillUpdateMtGeeCrct.pdf, from Marathon’s own website.

Eleven bags here, now where’s the rest, the other 9,989?

Marathon’s drilling and despoliation of the Heritage listed Mt Gee in the middle of the Arkaroola Wilderness Sanctuary occurred both before and after these dates. Rare fluorite crystal deposits, supposed to have been protected by the Heritage listing, were gutted. Untold damage was done to the surrounding area. More than 50 tonnes of ore bearing uranium oxide (yellow cake), previously locked up in deposits many metres underground, was brought to the surface as dust from diamond drilling and dumped next to the famed Ridgetop Tour in the middle of Arkaroola Wilderness Sanctuary.

The laws we have, state and federal, have not been properly policed, thanks to the incompetence of state and federal officials. It took a tip off, prominently publicised in the Sunday Mail, before they would act. Where are their reports? They must be made public.

One of Marathon’s principal shareholders is in court on corruption charges in Queensland. Why is this company’s interest getting an easy ride down here? Why did the SA Minister open the Marathon offices in July last year, and then delay a decision about mining when he had more than sufficient reason – 10,000 of them, to cancel the license altogether? Stronger laws to ban mining must be passed to protect this area from these environmental vandals, for once and for all, and the laws we do have must be properly policed.

Significant Wilderness, Insignificant and Dangerous Deposit

It is not as though it is a significant deposit, but it is a significant Wilderness area, on the national heritage. Marathon board members, many of whom held large portfolios acquired at favourable rates, are fond of talking up this deposit as “100% owned” and as “one of the most significant”.

Well, they are wrong on both counts. Aboriginal people claim Native Title to the area, an area of deep and continuing spiritual significance. Arkaroola holds the pastoral lease, and works with Aboriginal people on land management, which is more than can be said for Marathon.

Marathon never held the exploration license in the first place. Several other companies did, most of them large, recognised and competent mining companies. Wisely, they walked away when they realised the deposit itself was as nothing compared to other deposits and the significance of the area to its traditional owners.

The license that Marathon uses was latterly acquired by a group called Bonanza Gold (see Bonanza Boys). Marathon took that company over, at a cost, and taking on at least two of their directors. They still owe royalties to IMG, the successor to Goldstream which otherwise walked away as well.

The facts are that this small area has been pincushioned with drill holes many times over the last thirty or forty years – more than 796 of them totalling more than 80 kilometres. The geology is well known.

And, as uranium oxide, it is just not worth it. The site might hold about 00.37% of Australia’s known reserves. Most of Mt Gee’s is low grade in hard rock with a seismically active bottom known to be at boiling point.

There are many, larger, high grade deposits accessible in more stable and less significant areas.

Then why the fuss?

There’s money to be made, but not necessarily in mining the deposit. Marathon never paid a dividend on its 60+ million shares. It probably never will. But, if informed people are clever enough to manipulate the market price, then there’s money to be made.

Marathon’s shares topped $6 less than a year ago. Some Directors held earlier options at 20 cents. Even now, with the low around $1:22, that’s not a bad margin for an option costing 20 cents.

Prices 13 February, 2008

Someone’s making money out of this, as the share charts show. More than 436,000 shares traded when it’s usually less than a quarter of that. To the uninitiated, this might look like a panic, and to some extent it is. But, money can be made if the price is right, and for some few it has been. For many, it’s a right royal rip off.

Marathon’s long term share history makes more interesting reading. Try this site (http://www.tradingroom.com.au/apps/qt/quote.ac?section=chart&code=MTN ) to see the incidence of large trades, then check when and what announcements have been made. Someone’s being suckered, and that someone includes this state government.

Share price graph – heading southRecently, Marathon discovered that it could not raise $27m on the open market. The market was wary, and that was before drilling was suspended. The question must be asked – did they ever have any real intention of mining, or was it just another way for some clever players to make money, playing the market?

Either way, it makes no difference. This is a sanctuary, and there are those who will protect it even if Miner Mike and our other politicians won’t. Doesn’t matter how hard it is, or how long it takes, this place will be protected. Let’s see the end of this charade. Act now. Ban the mining of Mt Gee.